Judge Martin Glenn determined that the Earn program’s terms of usage were “unambiguous,” and that it was also more reasonable to classify account holders as unsecured creditors.
The funds in the Celsius interest-bearing Earn program belong to Celsius under the rules of the program’s conditions of usage, according to a ruling made on January 4 by Judge Martin Glenn, who is presiding over the bankruptcy case for Celsius. According to reports, the funds total more than $4 billion.
The most recent version of the Earn program’s conditions of use, the U.S. bankruptcy judge ruled, “The issue of ownership of the assets in the Earn Accounts is a contract law issue.” In accordance with those conditions, lending platform Celsius possessed “all right and title to such Eligible Digital Assets, including ownership rights.”
“As has been said repeatedly in this opinion, creditor’s rights with respect to various defense to and breach of contract claims are reserved. Creditors will have every opportunity to have a full hearing on the merits of these arguments during the claims resolution process.”
The court gave Celsius an extension to come up with a Chapter 11 restructuring plan by Feb. 15. Judge Martin ordered the return of $44 million worth of crypto held in customers’ custodial accounts on Dec. 7. Celsius declared bankruptcy July 14.
The ruling makes reference to $18 million worth of stablecoins in the Earn program that Celsius had sought to sell, saying it should be allowed:
“In the exercise of its business judgment, the Debtors have established a good business reason to permit the sale.”
State securities authorities and the United States Trustee had argued against approving the sale, claiming Celsius already had enough money to function “over the next few months.”